Correlation Between Walmart and C Mer
Can any of the company-specific risk be diversified away by investing in both Walmart and C Mer at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Walmart and C Mer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and C Mer Industries, you can compare the effects of market volatilities on Walmart and C Mer and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Walmart with a short position of C Mer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and C Mer.
Diversification Opportunities for Walmart and C Mer
Very weak diversification
The 3 months correlation between Walmart and CMER is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and C Mer Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Mer Industries and Walmart is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Walmart are associated (or correlated) with C Mer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Mer Industries has no effect on the direction of Walmart i.e., Walmart and C Mer go up and down completely randomly.
Pair Corralation between Walmart and C Mer
Considering the 90-day investment horizon Walmart is expected to generate 0.32 times more return on investment than C Mer. However, Walmart is 3.15 times less risky than C Mer. It trades about -0.16 of its potential returns per unit of risk. C Mer Industries is currently generating about -0.43 per unit of risk. If you would invest 6,057 in Walmart on January 24, 2024 and sell it today you would lose (148.00) from holding Walmart or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Walmart vs. C Mer Industries
Performance |
| Timeline |
| Walmart |
| C Mer Industries |
Walmart and C Mer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and C Mer
The main advantage of trading using opposite Walmart and C Mer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, C Mer can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in C Mer will offset losses from the drop in C Mer's long position.| Walmart vs. Big Lots | Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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